BEIJING, February 22 (TMTPOST)—Chinese internet giant Tencent is adjusting its strategy on metaverse.

Source: Visual China

Tencent will introduce Oculus Quest 2, a popular virtual reality (VR) headset developed by Facebook parent Meta Platforms Inc., in China, and their partnership will be similar with that between Tencent and Nintendo, which allows Tencent to release Switch console and develop offline sales channels in China, Chinese tech news media outlet 36Kr learned from insiders in the industry on Monday.

Tencent has started talking with Meta months ago about introducing Quest 2 in China, and publishing Chinese version of existing videogames for the device, the Wall Street Journal cited people familiar with the matter later that day.

The talks are said to still at early stage and could not be concluded with a deal as the two companies need to address some issues such as how to handle use data, whether the partnership could lead to tightening scrutiny from governments. Tencent’s talks with Meta these months aim to distribute of Quest line of headsets in China, and have not agreed on details yet, Reuters’ sources revealed the same day.

Neither Tencent nor Meta responded to quest for comment on the news. This is the latest sign of Tencent’s struggle in metaverse. 36Kr’s report last week said some of teams at Tencent’s extended reality (XR) unit had been disbanded, and more than 300 employees affected would have two months to apply for new roles inside the company or find new jobs outside. The XR unit, founded in last June, has partially stopped operation in January after Shen Li, its key figure and head, resigned in last November. As one of few with development experience of VR hardware in Tencent, Shen joined in the company’s VR project in 2016 and launch of sensors and head-mounted display (HMD). The report noted that Qian Geng, the interim general manager who succeeded Shen, also serves as leader of Tencent’s gaming partnership with Nintendo.

Tencent had decided to scrap plan to develop its own XR device as it found hard to achieve profitability quickly and still needed large investment to make a competitive product, Reuters reported said last week. The tech giant expected XR project not to become profitable until 2027, and the unit was lack of promising games and non-gaming applications, according to the report. Tencent later responded that it didn’t abandon exploration on XR and the recent adjustment was made due to development of the industry.

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